Tussle over Tea hub

The proposed tea hub concept by the Government has garnered mixed response from the sector stakeholders who have echoed concerns over the fate of the ‘Ceylon Tea’ as a brand.
The Government in its budget proposals for 2016 had stated that it would make Sri Lanka a tea blending hub, which would enable tea from other origins to be brought into the country and blended.

The call for such a move has been on for several years with many exporters calling for Sri Lanka to be converted into a hub.
The budget for 2016 presented to Parliament by Finance Minister Ravi Karunanayake stated that despite being one of leading tea producers and exporters in the world, Sri Lanka had lost ground on value addition.

“In the last few months the tea industry made strong submissions to liberalize tea imports to Sri Lanka. As such with the aim of developing Sri Lanka as a tea hub I propose to liberalize the tea imports to the country within a regulatory framework with a view to encouraging value addition through blending etc.,” the Minister said in his speech on November 20.
“Sri Lanka is a bit late to do this. However, this should be done in a well planned manner, which does not tarnish the image of the brand ‘Ceylon Tea’,” said former Chairman of the Tea Exporters Association of Sri Lanka (TEA), Niraj de Mel.

De Mel was one of the prominent experts who had been campaigning for Sri Lanka to be made a hub for tea.
He added that the Tea Board had the responsibility of policing and ensuring the formation of a regulatory framework which needed to be in place to ensure that the tea brought down from other countries conform to a particular standard that does not hamper the local tea sector.

The year 2015 has so far been a forgettable year for the tea sector which has faced a Rs. 24 billion loss so far. The continuous slump in tea prices in the world market coupled with the internal issues faced by estate sector workers, have taken the industry from bad to worse.

The pathetic performance of the sector however cannot be completely attributed to the inefficiency of the sector but mostly to the economic, and political instabilities that have been prevalent in most of the key export markets.

Speaking to Weekend Nation, he alleged that this move was mooted and promoted by a handful of exporters who could not match up to the quality given by the likes of Dilmah.

Current Chairman of TEA, Rohan Fernando stated that it was high time Sri Lanka moved towards the hub concept since major tea production countries such as Kenya had already moved to the concept years ago. “We have been losing out to Kenya and Bangladesh since we have failed to take that step,” he said.

De Mel however argued that the usage of pure Ceylon Tea had decreased worldwide due to several factors including high price. The year 2015 has been a forgettable year for the tea industry due to the losses faced due to dwindling tea prices. The domestic political and economic issues faced in major tea export countries such as Syria, Iran, and Russia had played a key role in the drop in exports.

Malik Fernando pointed out that the country’s tea industry lacked proper marketing tactics, which resulted in the sector being unable to find new markets.